Share of foreign labor on SME labor market decreased significantly in 2020

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Tallinn skyline. Source: Siim Lõvi /ERR

A significant reduction took place in the share of foreign labor on the Estonian labor market of small and medium-sized enterprises (SMEs) last year, which apparently can be attributed to the government's labor policy as well as the impact of the pandemic, a survey by SEB shows.

While demand for foreign labor varies greatly by sector, it can be noted that in the coming few years specialists and laborers, rather than managers, will be sought from abroad, SEB said.

The survey conducted among SMEs at the end of 2020 shows that 17 percent of Estonian SMEs use foreign labor or are planning to hire it. 

"The forecast shows, however, that this year enterprises intend to hire rather specialists than unskilled laborers from abroad. Where today about 47 percent of foreigners are unskilled laborers, about one-fifth of businesses have also hired managers from abroad," Tatjana Vakulenko, manager for the SME segment at SEB Estonia, said.

She said that the ratios were additionally affected by the difficulties related to hiring of foreign labor last year. 

According to the survey, the number of companies using unskilled foreign labor decreased by approximately 35 percent year over year in 2020, largely due to the reduction in the inflow of foreign labor.

Meanwhile, at the companies which managed to import labor from abroad also in 2020, despite the travel restrictions and other obstacles, the ratio of foreign unskilled workers remained on the same level as in 2019, which shows that the need for additional labor at companies has been preserved.

Interest in hiring workers from abroad is highest among companies active in construction, logistics and agriculture - where such businesses made up respectively 26, 23 and 21 percent. In the fields of trade and entertainment the need is significantly lower. 

In total 3,071 businesses in the three Baltic countries, including 1,019 in Estonia, filled in the questionnaire for the SEB survey conducted in December 2020. Eighty-six percent of the companies taking part in the survey employed up to 10 people. 

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Editor: Helen Wright

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